Russell v. Chase Investment Services Corp.
| Citation | 2009 OK 22,212 P.3d 1178 |
| Decision Date | 07 April 2009 |
| Docket Number | No. 106,515.,106,515. |
| Parties | Suzanne RUSSELL, not individually, but as Guardian of Donald R. Russell, an incapacitated person, Plaintiff, v. CHASE INVESTMENT SERVICES CORP., a Delaware corporation, Defendant. |
| Court | Oklahoma Supreme Court |
Lawrence A.G. Johnson, Tulsa, OK, for the Plaintiff.
James E. Weger, Tadd J.P. Bogan, Jones, Gotcher & Bogan, Tulsa, OK, for the Defendant.
¶ 1 The United States District Court for the Northern District of Oklahoma, pursuant to the Revised Uniform Certification of Questions of Law Act, 20 O.S.2001, §§ 1601-1606, certified the question:
Does the appointment of a general guardian withdraw all of the assets from the estate of a ward subject to a durable power of attorney, such that the person holding power of attorney is without authority to control the ward's assets?
We answer that the appointment of a general guardian of the property1 does not automatically withdraw all of a ward's assets such that an attorney-in-fact is without power to act on a ward's behalf pursuant to a durable power of attorney.2
¶ 2 The following facts are presented in the order certifying the question or in the record as certified to this Court. On April 7, 1999, Donald R. Russell (the ward) executed a durable power of attorney (DPA) naming Brenda Kennemer (Kennemer), his daughter, as his attorney-in-fact to "become effective upon [his] disability or incapacity." The ward's DPA gave Kennemer broad power over the ward's person and his property, including (1) the power to "sell, convey, lease, exchange, mortgage, pledge, release, hypothecate or otherwise deal with, dispose of, exchange, or encumber any of my property, either real or personal," (2) the power to "withdraw funds from and draw and sign checks in my name upon any bank or trust company, savings institution, or money-market fund in which I may have funds on deposit or in any new account opened in my name," (3) "the power to hold, invest, reinvest and otherwise deal with and manage all property in which I have any interest," and (4) "the power to transfer or surrender any securities which I may own." The ward's DPA provided that it "shall be valid and binding upon me until revoked or terminated."
¶ 3 In June of 1999, the ward arranged for the defendant, Chase Investment Services Corporation (Chase), to act as custodian of his Individual Retirement Account and to make $1,000.00 monthly distributions to him from the account. In April of 2000, the ward suffered a stroke, and Kennemer and the ward's wife, Suzanne Russell (Russell), agreed that the ward became incapacitated on or about April 23, 2000.3
¶ 4 On February 26, 2001, the Oklahoma District Court for Wagoner County issued an order finding the ward to be incapacitated and naming Kennemer and Russell as co-guardians.4 On March 15, 2001, Kennemer and Russell jointly filed an inventory of the ward's property.
¶ 5 The record contains an amended plan for the ward's care and treatment. It provides that the ward shall remain in his home, that "Kennemer will be retained on a full time monthly basis to care for the Ward," that Kennemer "will be paid $1,500.00 a month," and that "[t]he Arkansas Valley CD will be cashed and used to provide the necessary funds to pay Brenda Kennemer." The record does Not contain a plan for management of the ward's financial resources.5 Neither Kennemer nor Russell filed yearly accountings from 2001 through 2005. On July 31, 2006, Russell filed a yearly accounting for August 8, 2005, through July 18, 2006.
¶ 6 According to Russell's deposition, soon after being named guardians, she and Kennemer presented Chase with the ward's DPA and the guardianship letters.6 Russell alleges that between 2002 and 2005, Chase, at Kennemer's request and based on the ward's DPA, made approximately $99,000.00 in distributions from the ward's IRA. Russell contends that she confronted Kennemer and that Kennemer then committed suicide.
¶ 7 Russell sued Chase7 in the Tulsa County District Court for the State of Oklahoma. The petition alleges that the defendant, as a fiduciary, allowed Kennemer to withdraw the ward's IRA assets with no proof of her authority to do so. The case was removed to the United States District Court for the Northern District of Oklahoma. On April 27, 2007, Russell filed a motion asking the federal district court to formulate and certify a question of state law to this Court. Chase initially opposed the motion. At the pretrial hearing held on October 14, 2008, the parties agreed to the question's certification. On October 28, 2008, the Honorable Gregory K. Frizzell issued an order certifying the question to this Court.
¶ 8 In addressing certified questions, this Court's power is limited to answering questions of law. 20 O.S.2001, § 1602. Thus, this Court does not function as a fact finder when answering questions certified pursuant to title 20, sections 1601 through 1606. Russell alleged that Kennemer misappropriated the money disbursed by Chase pursuant to the ward's DPA. We note that the federal district court's statement of facts and the record presented to this Court are incomplete for a determination of this alleged fact. There is nothing in the statement of facts or the record supporting Russell's allegation that Kennemer misappropriated the money allegedly improperly disbursed by Chase. No fact question can be resolved by this Court when answering a certified question of law. There are other allegations, such as whether Russell had access to the ward's accounts and their balances, which are, likewise, not properly before this Court.
¶ 9 Russell's position is that the appointment of a general guardian effectively terminates a DPA, that a specific court order is required for transactions involving bonds and retirement accounts subject to a guardianship, and, thus, Chase breached a fiduciary duty by disbursing funds pursuant to the ward's DPA without a court order. Russell urges that, with the appointment of a general guardian, all of the ward's property subject to the guardianship proceeding is brought within the court's exclusive control. Russell concludes that the court has exclusive power to authorize the property's disposition which is inconsistent with the continuing existence of a DPA. As we view it, the thrust of Russell's argument is that there is a conflict between the Oklahoma Guardianship and Conservatorship Act (Guardianship Act), 30 O.S.2001, §§ 1-102 to 5-101, and the Oklahoma Uniform Durable Power of Attorney Act (ODPA Act), 58 O.S.2001, §§ 1071-1077, and that the Guardianship Act controls.
¶ 10 Chase argues that, under section 1074 of the ODPA Act, a DPA does not automatically terminate with the appointment of a general guardian but remains in effect until revoked by the guardian.8 Chase concludes then that it was justified in honoring the ward's DPA after the appointment of a general guardian.
¶ 11 In 1988, Oklahoma enacted the ODPA Act.1988 Okla. Sess. Laws 1453-1455, ch. 293, §§ 1-11 (now codified at 58 O.S.2001, §§ 1071-1077). The ODPA Act is taken from the Uniform Durable Power of Attorney Act of 1979 (UDPA Act), 8A U.L.A. 233 (2003), and sections 5-501 through 5-505 the Uniform Probate Code (UPC), 8-II U.L.A. 418 (1998).9 The ODPA allows a principal to create an agency which continues during incapacity or which becomes effective during incapacity. 58 O.S.2001, § 1073; Prefatory Note to UDPA Act, 8 U.L.A. 234 (2003); Prefatory Note to UPC, 8-II U.L.A. 418 (1998). The UDPA Act was developed as an alternative to court involvement in cases of incapacity, Prefatory Note to UDPA Act, 8 U.L.A. 234 (2003); Prefatory Note to UPC, 8-II U.L.A. 418 (1998), and gives a principal some control over who manages his property and person should the principal become incapacitated.
¶ 12 Subsection 1074(A) of the ODPA Act10 provides:
A. If, following execution of a durable power of attorney, a court of the principal's domicile appoints a conservator, guardian of the estate, or other fiduciary charged with the management of all of the principal's property or all of his property except specified exclusions, the attorney-in-fact is accountable to the fiduciary as well as to the principal. The fiduciary has the same power to revoke or amend the power of attorney that the principal would have had if he were not disabled or incapacitated.
(Emphasis added.) If the DPA was effectively terminated upon the appointment of a general guardian as Russell argues, there would be nothing for the guardian to revoke or amend, making the last sentence of subsection 1074(A) extraneous. Section 1074(A)'s plain language unambiguously expresses the legislative intent that the authority of an attorney-in-fact acting pursuant to a DPA does not automatically cease with the appointment of a guardian.
¶ 13 The legislative intent expressed in section 1074's plain language is supported by the comments to the UDPA Act and UPC. Section 1074's drafters wrote the UDPA Act and UPC so that the court appointment of a fiduciary, such as a guardian or conservator, would not automatically terminate...
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